The Internal Revenue Service is alerting filers that a failure to provide accurate direct deposit information could result in significant delays for tax refunds, with some taxpayers facing waits exceeding ten weeks. This season, the agency has dispatched over 830,000 CP53E notices to individuals whose electronic refund transfers could not be completed due to incorrect or missing banking details.
Substantial Processing Delays
According to communications from the House Ways and Means Committee Democrats, the IRS had issued approximately 530,000 CP53E notices by early March and was preparing to send an additional 300,000. Recipients of these notices typically have a 30-day window to correct their bank information online. If no action is taken, the IRS will issue a paper check after about six weeks, extending the total processing time well beyond the standard timeline for electronic refunds.
Policy Origins and Current Impact
The shift toward mandatory electronic payments originated with Executive Order 14247, signed during the Trump administration. For the 2025 tax returns filed this year, the Taxpayer Advocate Service has cautioned that refunds associated with invalid bank information or bounced direct deposits are at risk of being frozen. Taxpayers must either update their banking details or formally request a paper check to release the funds.
The IRS reports that the vast majority of refunds are distributed electronically. During the 2025 filing season, the agency processed over 93.5 million individual refunds, with nearly 87 million—roughly 93%—sent via direct deposit. The agency notes that paper checks are more than 16 times more likely to be lost, stolen, altered, or delayed compared to electronic transfers.
Congressional Scrutiny and Equity Concerns
Lawmakers on Capitol Hill have raised alarms about the policy's impact. Representatives Danny Davis and Terri Sewell have highlighted that taxpayers caught in this updated process could wait more than 10 weeks for a paper refund check. In a formal letter, they pressed Treasury and IRS officials for solutions, specifically asking how individuals without online access can expedite their refunds and whether late filers will receive interest payments for these delays.
"The government does not appreciate how difficult it is for some populations to open a bank account," said Melissa Wiley, a partner at Kostelanetz, in comments to Thomson Reuters Checkpoint. She emphasized that for many households, tax refunds are crucial for covering essential living expenses.
Vulnerable Groups Disproportionately Affected
National Taxpayer Advocate Erin Collins has identified that approximately 10 million individuals still received paper checks last year. She flagged unbanked households, Americans living overseas, certain religious communities, survivors of domestic violence, and people with disabilities as populations likely to encounter significant obstacles if the system moves entirely to digital disbursements. "We should not, however, advance technological change at the cost of excluding those who need accommodations," Collins wrote in her analysis.
Procedure for Taxpayers
Taxpayers who receive a CP53E notice must update their bank information through their IRS online account; calling the IRS will not resolve the issue, as representatives are not authorized to accept banking details over the phone. The Taxpayer Advocate Service notes that the notice is sent only once. If a taxpayer does not wish to set up direct deposit, they can use the online account to request a paper check instead.
The IRS advises filers to watch for official letters from the agency—not phone calls or text messages—if banking information is missing. It's important to note that the direct-deposit policy is just one factor that can delay a refund. Other common holdups include mathematical errors, incomplete or amended tax forms, fraud or identity verification flags, additional review of certain tax credits, or processing time required by the recipient's bank.
Taxpayers can check the status of their refund using the "Where's My Refund?" tool on the IRS website. The tool updates every 24 hours and is available 24 hours after e-filing a current-year return, three days after e-filing a prior-year return, or four weeks after mailing a paper return. To access the status, individuals need their Social Security or Individual Taxpayer Identification Number, their filing status, the exact refund amount, and the relevant tax year.